Draft Bribery Bill - Joint Committee on the Draft Bribery Bill

Draft Bribery Bill - Joint Committee on the Draft Bribery Bill Contents

6 GUIDANCE

108. As we have noted above, there was widespread agreement that guidance will be needed on the provisions in the draft Bill. There was, however, less concensus over its status, content and delivery. We also note the distinction drawn by some witnesses between guidance on prosecution policy and guidance on compliance issues. We address this distinction below.

(a) Status

109. A large number of private sector organisations already provide informal guidance and advice on tackling corruption. We benefited from receiving many helpful examples. Yet there was a widely shared concern that commercial organisations will lack certainty about what is expected from them under the draft Bill unless there is official guidance of some kind. For instance, Louise Delahunty of Simmons and Simmons noted the "plethora" of international sources of advice. She stated that Government was best placed to bring clarity to the situation.[195] The UK Anti-Corruption Forum added that it was costing companies large amounts of money to develop policies and seek advice on a fragmented basis.[196]

110. The Director of Public Prosecutions accepted that centrally issued guidance on prosecution policy could be prepared by prosecutors under the superintendence of the Attorney General. He anticipated that it would outline the approach that prosecutors would take under the proposed offences, while noting that no other department could provide guidance of this kind since it would undermine prosecutorial independence.[197] BG Group Plc, in particular, endorsed the value of a clear statement on prosecutorial practice.[198] There is clearly scope for this to be explored.

111. However, the Director of Public Prosecutions drew a clear distinction between prosecutorial practice and "compliance" issues such as the meaning of "adequate procedures". He considered that the second type of issue would be best addressed by informal industry-led guidance which prosecutors and juries would then take into account when deciding whether to charge or convict.[199]

112. The Director of Public Prosecutions was joined by the Attorney General and the Director of the Serious Fraud Office in calling for realism about what can be achieved through guidance in general, emphasising that no single document can cover every situation.[200] The prosecutors therefore favoured broad principles over detailed rules.[201] Although the Director of the Serious Fraud Office stated that prosecutors could discuss a lot with organisations about prosecution policy, he was sceptical about the introduction of official guidance more generally.[202] The Attorney General agreed.[203] Transparency International UK was also concerned about guidance becoming "a forum for the attempted erosion of the impact of the Bill".[204]

113. We were informed about the detailed official guidance that is prepared in the United States by the Department of Justice.[205] The Secretary of State for Justice drew a distinction between arrangements in the US where, in broad terms, the Attorney General's functions are combined with those of our Ministry of Justice.[206] In particular, we note that there is scope in the United States to enter into deferred prosecution agreements, non-prosecution agreements and also to approach sentencing and mitigation in a more flexible manner, including in relation to debarment, which we address below in Chapter 11.[207] The limited time available to carry out our inquiry has precluded us from exploring these differences in greater detail. While the UK may be moving in part towards a similar approach, we note the significant differences that remain. The Secretary of State for Justice stated:

208

114. A number of witnesses suggested an intermediate approach under which professional bodies prepared guidance which was then given an official status through its recognition by the Government. The guidance would be admissible as evidence in relation to whether an offence had been committed. Herbert Smith stated that a similar approach has worked well under the Money Laundering Regulations, which provide that:

(2) In deciding whether a person has committed an offence under paragraph (1), the court must consider whether he followed any relevant guidance which was at the time—

(a) issued by a supervisory authority or any other appropriate body;

(b) approved by the Treasury; and

(c) published in a manner approved by the Treasury as suitable in their opinion to bring the guidance to the attention of persons likely to be affected by it.

209

Louise Delahunty of Simmons and Simmons, among others, called for a similar provision to be added to the draft Bill. Herbert Smith believed it would "promote and publicise best practice [… and] ease the burden considerably on organisations trying to comply with the proposed legislation".[210]

115. On the other hand the prosecutors, including the Attorney General, argued that compliance guidance of this kind is best suited to heavily regulated areas such as money laundering, as opposed to bribery. However, we note that the Government's former Anti-Corruption Champion endorsed the "practical toolkit" developed by the defence sector to help small businesses implement its Common Industry Standards.[211]

116. PricewaterhouseCoopers, among others, recommend that guidance should be given a clear role in determining whether an offence had been committed without, in general, being mandatory.[212] Other witnesses suggested that guidance could be prepared (or authorised) by the Department of Business, Innovation and Skills, or by a new body equivalent to the Health and Safety Executive.[213]

117. We support calls for official guidance to be prepared on key aspects of the draft Bill in the interests of promoting certainty. It would, in particular, help commercial organisations to stay within the law and remove the excuse from those who do not. We therefore recommend the introduction of a new clause giving the Government power to approve guidance prepared by appropriate bodies, in line with the model that already exists under the Money Laundering Regulations. We believe that this represents a workable solution that will build on the growing expertise within the private sector, while limiting the burden on Government.

(b) Content

118. The meaning of "adequate procedures" was by far the most common issue on which witnesses called for official guidance. For instance, Lord Robertson stated: "guidance should accompany the Bill and should be seen as an important part of its interpretation, so there has to be some clear and authoritative guidance as to what constitutes 'adequate procedures'".[214] It was also firmly backed by Professor Horder:

215

119. The Director of the Serious Fraud Office stated that, at a minimum, such procedures should entail the creation of "a robust compliance tool kit to assess how successful the company has been in mitigating risk including":

a clear statement of an anti-corruption programme fully and visibly supported at the highest levels in the company (what is prohibited behaviour, etc)

a clear and personalised reporting structure from the CEO down to all managers

a code of ethics

principles that are applicable regardless of local laws or culture

individual accountability

a policy on gifts and hospitality and facilitation payments

a policy on outside advisors/third parties, including vetting and due diligence

training - to enable staff to comment and input

robust maintenance - auditing/updating/evaluation/actions.

The wide range of private sector protocols that we received during our inquiry illustrated the ways in which these basic principles could be fleshed out in a flexible and practical way for business.[216]

120. More generally, the UK Anti-Corruption Forum reflected the broad range of views of our witnesses on the content of guidance when it stated:

217

Other witnesses also raised a range of additional issues - for instance, the International Chamber of Commerce (UK) added the treatment of commercial agents to this list.[218] We note that guidance is one of several issues that will require a co-ordinated response with the Scottish Executive and the Governments of the Overseas Territories and Crown Dependencies.

121. Official guidance on how to comply with the provisions of the draft Bill should, at a minimum, cover the meaning of "adequate procedures". The process of sanctioning guidance should provide an opportunity for professional bodies to work alongside Government in identifying any further areas in which clarification is required. These could include, for instance, questions about the application of the draft Bill to subsidiaries, joint ventures and commercial agents.

(c) Timing

122. There are competing interests over the timing of guidance. The Director of the Serious Fraud Office expressed his concern about protracted delays pending the preparation of "very detailed" protocols: "the important thing for investigators and prosecutors is to have the new offences which we can then implement".[219] In contrast, the Confederation of British Industry and ThalesUK were keen for official guidance to be available before the new offences came into force.[220]

123. There is no reason why the preparation of official guidance should delay the passage of a Bribery Bill. It should, however, be available for use before the offences come into force in order to give businesses time to prepare for its introduction.

(d) A formal advisory service?

124. The Attorney General in the United States is required to provide an advisory service responding to requests about whether a proposed action will be lawful pursuant to the Foreign Corrupt Practices Act 1977. There is a rebuttable presumption that acting in accordance with the advice will mean that no offence has been committed. A number of witnesses called for an equivalent service to be included in the draft Bill.[221] For instance, Philip Bramwell of BAE Systems Plc stated:

222

125. The Director of the Serious Fraud Office stated that there are occasions when his office will discuss points of general principle with companies under its "policy of engagement", including in relation to proposed mergers, but he drew a clear line at providing a formal advisory service:

223

The Attorney General and the Director of Public Prosecutions agreed, noting the differences between the criminal justice systems in the United States and the United Kingdom which we identified above. Professor Wells viewed an advisory service as an "unnecessary public expense".[224]

126. Professor Horder offered tentative support to the idea of creating an independent body to provide an advisory service:

225

127. We are aware of examples of this type of independent body, such as Hong Kong's Independent Commission Against Corruption (ICAC). In particular, the ICAC's Corruption Prevention Department created an Advisory Services Group in 1986 which has since advised over 3,000 private companies. The lack of time available to carry out our inquiry has prevented us from exploring this body in any detail, although we understand that its services are focused on compliance procedures aimed at minimising the risk of corruption rather than the risk of a prosecution arising from prospective action.[226] The Secretary of State for Justice stated that he could envisage non-Government bodies providing advice on compliance, but dismissed the potential for such a body to provide anything approaching the semi-binding advice obtained in the United States.[227] The Director of Public Prosecutions and the Attorney General were also concerned about an independent (but official) body advising on prosecutorial issues on the grounds that it would risk undermining the independence of prosecutors, who would ultimately need to take the final decision about whether to charge a company.[228]

128. The Director of the Serious Fraud Office, among others, also raised the potential resource implications of an advisory service: "there would be a natural temptation to seek advice on each transaction so as to show compliance with the adequate procedure. This would be unmanageable".[229] The US Department of Justice was unable to provide information about the costs of providing its service, although we were informed that it receives fewer than five requests for an opinion in an average year[230].

129. We acknowledge that a formal advisory service similar to that provided in the United States and Hong Kong, could have great benefit. We note, however, that differences between our criminal justice systems prevent direct analogies being drawn and mean that it would in practice be difficult to establish such a service. We are therefore not persuaded that the Government should seek to establish an equivalent in the United Kingdom. We are particularly concerned about its potential impact on the independence of prosecutors.

195 Q339 Back

196 Q248 (James Maton) Back

197 BB48, para 3 Back

198 BB19 Back

199 BB48, para 3(d) Back

200 BB60, Q414 (Richard Alderman) Back

201 BB48 Back

202 Q414; BB47 Back

203 BB60 Back

204 Q528 Back

205 BB57; BB19 Back

206 Q584 Back